The Overall Fundamentals 

Precious Metals

The complex gained across the board with the exception of Palladium.

Gold traded below 1600 for most of the week after breaking below this psych mark on 21 June. The precious Yellow metal fell to as low as 1547.6 last Thursday, then staged a strong rebound Friday.

The benchmark Comex contract rose to the highest level in a week + before settling at 1604.2, gaining +2.39% on the week.

Gold has been performing more inline with risk assets rather than safe-haven in recent months.

The price has been pressured due to worries over a global economic slowdown, and the debt problems in the Eurozone. Friday's rebound was driven by the optimism behind the plans announced after the EU Summit.


Crude Oil prices were pressured most of the week on worries over the sovereign debt crisis in the Eurozone and signs of global economic slowdown.

But, prices spiked Friday as headlines from the EU summit raised optimism and lifted risk appetite. The front-month contract for WTI Crude Oil gained +6.52% to settle at 84.96, the equivalent Brent Crude contract rose +7.50%, to finish the week at 97.8.

Some attributed the sharp correction of Crude Oil prices in Q-2 of this year to the continuous increase in Saudi Arabia output, IMO that is not accurate.

According to the DOE-EIA, while Saudi's production had reached 10-M BPD in March and April, a decline back to 9.8-M BPD was seen in May.

OPEC did not react to the recent sharp fall in Crude Oil prices at the general meeting, most member nations still favored the price at 100 bbl. If the market's severe surplus and threatened the break even prices of the Crude Oil-producing countries continues I believe that joint action from the cartel will be made to choke production.

Nat Gas rose +7.58% last week. The DOE-EIA reported that Nat Gas storage increased +57 bcf to 3063 bcf in the week ended 22 June. Stocks were 653 bcf higher than the same period last year and 613 bcf above the 5-year average of 2450 bcf.

Rig Count

Baker Hughes reported that the number of Nat Gas rigs fell -7 units to 534 in the week ended 29 June. Oil rigs stayed unchanged at 1 421 rigs and miscellaneous rigs stayed at 4 units and the total number of rigs was down -7 units to 1 959 units. Directionally oriented combined oil, gas, and miscellaneous rigs added +2 units to 235 units while horizontal rigs increased +6 units to 1 171 and vertical rigs fell -15 units to 553 during the week.

The Overall Technicals

Comex Gold (GC)

Despite dipping to 1547.6, Gold formed a short term bottom there on Bullish convergence condition in 4 hrs MACD and rebounded.

The current development suggests that the consolidation pattern from 1526.7 is still in progress with the rise from 1547.6 as the 3rd leg.

A stronger rally could be seen this week towards 1642.4 next.

On the Downside: any retreat attempt should be contained above 1547.6 in near term and bring on another rally.

The Big Picture: price actions from 1923.7, the high, are viewed as a medium term consolidation pattern. There is no indication that this consolidation is finished, and more range trading could be seen. Any downside of any falling leg should be contained by 1478.3/1577.4, the support zone, and bring on a rebound. But, a break of 1792.7, the Key resistance, is needed to be the 1st signal of up-trend resumption. Barring that I believe that the consolidation will extend.

The Long Term Picture: with 1478.3, the Key support intact, there is no change in my long term Bullish outlook for Gold, we could see some more medium term consolidation, but I anticipate the eventual crack of 2000, the psych mark, in the long run. Stay tuned...

Comex Gold Continuous Contract Daily Chart


Comex Silver (SI)

Silver fell to 26.07 last week, and failed to stay below 26.145, the Key support, and rebounded.

Considering Bullish convergence condition in 4 hrs MACD, a short term bottom should be in place now.

The initial bias is now mildly on the Northside this week for rebound back towards 29.865, the Key resistance.

On the Downside: a break of 26.07 is needed to confirm the fall's resumption.

Barring that, I am staying Neutral Silver for now.

The Big Picture: Silver's price actions from 26.15 should be a consolidation pattern only. I am still favoring the case that the consolidation finished at 37.48. And, fall from 37.48 should extend to 61.8% retracement of 8.4 to 49.82 at 24.22 and below. But, a clear break of 29.856 suggests 1 more rising leg before consolidation from 26.15 is finished.

The Long Term Picture: the main question remains, is 49.82 a medium term or long term top, it look like the latter now. I would prefer to see sustained break of 61.8% retracement of 8.4 to 49.82 at 24.22 to confirm. If not, the price actions from 49.82 could be developing into a sideway pattern. Stay tuned...

Comex Silver Continuous Contract Daily Chart


Nymex Crude Oil (CL)

Crude Oil came back strong at the end of last week, the development indicates that a short term bottom is at formed at 77.28, on Bullish convergence condition in 4 hrs MACD.

Initial bias is back on the Northside for this week for 38.2% retracement of 110.55 to 77.28 at 89.99 1st.

On the Downside: any retreat should be contained above 77.28 low and bring on the rebound's resumption.

The Big Picture: Crude Oil's price actions from 114.84 are viewed as a 3 wave consolidation pattern with fall from 110.55 as the 3rd leg, this decline could have finished earlier than we expected at 77.28. Sustained trading above 90 psych mark will bring a stronger rally towards 114.83, the Key resistance. A clear break there signals the resumption of the up-trend from 33.2.

On the Downside: but another fall cannot be ruled out, and even if, strong support should be seen below 74.95 and above 61.8% retracement of 33.20 to 114.83 at 64.38 and bring another medium term rise IMO.

The Long Term Picture: Crude Oil is in a long term consolidation pattern from 147.27, with the 1st wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it is the 2nd wave of the consolidation pattern. While it could make another high above 114.83, I anticipate strong resistance ahead of 147.24 to bring reversal for the 3rd leg of the consolidation pattern. Stay tuned...

Nymex Crude Oil Continuous Contract Daily Chart


Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.